The International Accounting Standards Board has introduced a new hedge accounting model as a major step forward in the financial instruments project on which it has been collaborating with the Financial Accounting Standards Board.

The amendments to IFRS entail a substantial overhaul of hedge accounting to enable entities to better reflect their risk management activities in the financial statements. Some of the changes would address the so-called “own credit” issue that were already included in IFRS 9 “Financial Instruments” to  be  applied in isolation without the need to change any other accounting for financial instruments. In addition, the changes would remove the Jan. 1, 2015 mandatory effective date of IFRS 9, to provide sufficient time for preparers of financial statements to make the transition to the new requirements.

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